Press Release
February 1, 2006


Senate Minority Leader Aquilino Nene Q. Pimentel, Jr. (PDP-Laban) today expressed doubts whether the increase in the Value Added Tax from 10 to 12 percent effective Feb. 1 will enable the government to generate P82 billion to P100 billion in additional revenues this year.

Pimentel maintained the view that the Filipino people in general could hardly afford the added VAT imposition since their income has remained static, if not gone down while the purchasing power of the peso is declining due to inflation.

He cited official government reports that VAT collections last year fell short of the targeted by P10.4 billion despite the implementation of the expanded Value Added Tax (EVAT) law starting Nov. 1, 2005.

According to the report, the Bureau of Internal Revenue collected only P87.39 billion, or P7.31 billion short of target, while the Bureau of Customs accounted for P69.4 billion in VAT collection, or P3.1 billion short of target.

These figures indicate two things. First, consumers are not in a position to absorb higher tax for essential goods that they purchase. Second, the tax collection system remains inefficient and efforts should be intensified to fix the leakages in the system, Pimentel said.

The minority leader said that the government, instead of making the VAT more burdensome for the ordinary consumers, should also demonstrate more aggressiveness in going after big-time tax evaders and smugglers.

Citing a study of the Federation of Philippine Industries, Pimentel said the government is losing about P100 billion a year in customs duties due to unabated smuggling.

He decried that the Bureau of Customs has miserably failed to clamp down on the activities of the most notorious smugglers apparently due to the protection of powerful personalities in the administration.

Malacañang is good only at making promises to carry out an all-out campaign against tax evaders and smugglers but it is short of action. How can you expect the common taxpayers to faithfully comply with their tax obligation when the notorious tax dodgers remains untouched, thanks to the protection of their patrons and godfathers who are up there in the administration? Pimentel said.

He also warned that while the 12 percent VAT would bring greater sufferings to Filipinos, it could also bring disaster to the Arroyo administration by inflaming public anger.

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